Adverts used by a number of short term loans companies have been pulled from circulation by the companies after a newspaper investigation which exposed the possibility of them infringing the advertising code.
Payday loans are normally used by people who are short of cash for immediate bills such as the rent or a mortgage repayment. The loans attract very high interest repayments and are meant to be paid off quite quickly.
The adverts used by Ukpaydayloans.net and nadineloans.co.uk showed colourful pictures of smiling, young women with bulging shopping bags apparently promoting the idea that people should go on a shopping spree with one of their instant cash loans. Cosmetic surgery and loans to pay off the vet have also been a focus of controversial advertising.
An investigation by the Daily Mail newspaper has led to the two instant cash loan companies mentioned above withdrawing the ads which had led to the criticisms.
Another leading short term loans provider, the MoneyShop, has broken its link with one of the two companies involved in the advertising fracas but itself has been involved in minor breaches of the ASA’s (advertising standards authority) code.
The MoneyShop is owned by the American multinational instant cash loan company Dollar Financial and was at one time linked to nadine.co.uk through another affiliate company.
Three years ago, the MoneyShop was reprehended for using adverts suggesting to potential clients that one of their short term loans could be used for non essential items such as parties, holidays and shopping sprees.
Two years ago, QuickQuid was prosecuted for a breach of advertising in which it failed to mention its high APR interest rate of over 2000%, while at the same time stressing how easy it was to get an instant cash loan.
A year ago, Wonga.com, another big high street instant cash loan company, was accused of using laughter in its advert to suggest that using a bank to acquire a loan was laughable in comparison to getting one from an instant cash loan company.
The ASA has suggested that all these breaches of the advertising code promote irresponsible borrowing habits and encourage carefree and frivolous spending using the short term loans.